|
|
Salesman
Pay Survey Since the last survey
results in October, 2001, not many participated, so in order to supplement
the response we did receive, Leasing News asked several leaders in the
industry how they would respond to a question received from a reader about going to work
for a leasing company. Responses were listed in chronological order, first received: PB is Patrick Byrne,
president of Balboa Capital BL is Bruce Larsen,
National Sales Manager of Leasing Partners Capital JR is Jim Raeder,
president of Capital Werks DR is David Rabinowitz,
Chief Operating Office, Bankers Capital FS is Fred St. Laurent,
Managing Director, The BlassGroup (recruiting firm) “My name is I am
currently an outside sales rep with a fortune 100 company selling electronic
payment solutions (doing well but want to move up into the six figure
range). I have been offered a job with 888888 in SLC as an inside sales
rep. I found your site by searching Yahoo for the company and the content
is very informative. “This is quite a
jump. From a Fortune 100 company
selling electronic payment systems to a small company selling small
ticket equipment leases? Are
you sure you are ready for this transition(less resources, less name
recognition, etc.)? “ I am new to the leasing business (although I
do sell small equipment leases in my current position), and need to
make a critical career decision here. I am hoping that you could help
shed some light on the following: 1. Is ******* an ethical, stable company in good standing
as far as you know? I know there has been some turmoil in their past. I can t comment on
this as I do not know much about ***** PB I think Pats response
is as good as you can do without getting into any specifics about ***** LB Are Pro-rata Billing,
Interim Rent, Evergreen Clauses, Blind Discounts, and High Interest
Rates, unethical? Several debt
sources in the past used to believe so.
Most of those same lenders that have stayed in business for the
past three years and have adopted such revenue enhancers would not agree. I always subscribe,” What’s good for GE is good for me!” JR I don’t know enough
about the company or the principals to comment. DR Past is past... I
will not make a comment but I would suggest speaking with some references
... clients, sales people... I would do this on my own... a list from
the company could be biased. It is easy enough to research, identify
and ask innocuous questions that will get the information. FS 2. Are the market
conditions/demand for middle market brokered equipment leases (********t)
stabilizing, or are they still soft from the economic downturn? I would characterize
the market as still soft but stabilized with many leading indicators
pointing to an uptrend. PB Pat did a good job of responding. LB Although interest
rates remain low, the supply of money chasing quality credits is limited. Ever since CapitalWerks formed its Venture Leasing
division, we have succeeded with highly structured transactions passed on by most traditional lenders. We have not
seen a shortage in these types of deals.
Good news is we have placed over 35 Million in this division
alone in 2003. JR We run a hybrid shop;
we do some repeat business with an established existing customer base
but our main focus is to act as a high-risk funding source to a handful
of intermediaries. Business couldn’t be better ! Well, it could but
first we need a couple more quality credit analysts. We hear competition
is out there for deals and margins on” A” perceived credits are tight.
“B” paper is a big concern for intermediaries. Buy windows keep
closing (CIT just recently) and a few times a month we are asked if
we would fund “B” paper at a 9 ½% to 11% buy rate. From what we
see the banks have migrated to quality and raised the credit bar. That means a company
with some hair on its credit is a bit more challenging to find a funder
for. We have heard from vendors interest is increasing and soon
that should translate to activity; but time will tell. DR A soft market is
just another excuse to not work harder... The "New Guys" with a
strong work ethic who are to "dumb" to know any better usually seem to have
"beginner's luck" ... isn't that interesting. Yes it is a soft
market... but it is a great time to learn the business... interest
rates will rise again and learning this business in the "hard times"
will groom you to excel in the "good times" to come. FS 3. ********* is
offering me a $36k base, 50% company paid medical/dental etc., and 10%
on gross margin (including GM on FMV buyout residuals), with a $10k
bonus @ $500k in GM and a $15k bonus @ $1mm. Is this a competitive compensation
package? I read the sales pay survey and had a hard time determining
if it is. I have been told that their average rep makes $100k first
year, $150k second year... I would say that
this is competitive package for a vendor based sales rep that has sales
experience but is new to equipment leasing.
I find it hard to believe that a sales rep that is new to equipment
leasing could make $100k in the first year with this package, but I
have been wrong before. However, with the right resources, and time;
I believe that a six figure income with this package is reasonable. PB What kind of marketing support, etc., will *****e give him to basically
start from scratch? The base
salary s nice, but how long will they guaranty that if he doesn’t produce? What kind of quotas must he generate, at a minimum,
to protect his base? Obviously, straight commission will always offer
a bigger upside. BL I would say that
this is competitive package for a vendor based sales rep that has sales
experience but is new to equipment leasing.
I find it hard to believe that a sales rep that is new to equipment
leasing could make $100k in the first year with this package, but I
have been wrong before. However, with the right resources, and time;
I believe that a six figure income with this package is reasonable. JR Unless my 12C has
run out of juice, at $500,000 gross fee the rep earns $36 base, $50
commission and a $10 bonus; that’s $96,000 for generating $500,000 in
fee. In the mid 1980’s when I started in sales our comp program
was a draw at 30%. We would have earned $150,000 and I recall
when 30% was at the low end. A draw or salary isn’t much different;
if you don’t make your numbers the employer can’t recover the money and you won’t be
there long. DR Is the salary a true
salary or a draw against commission??? That would be the issue. There
are much better packages, 40-even 70% from 3rd party lenders, who would
pay you a draw, but they want experience and vendor relationships. Can
you do a 500k in gross margin in today's market though? I doubt that
someone new will hold that kind of margin the first year in this economy.
Reality is that you will make somewhere around 50-60k your first
year if you work really hard, with the market the way it is. AND HEY...
that's not bad if they are training you too!!! CAUTION: check out
what the medical costs will be on the benefit package before you take the
job... it can be a lot more than you think if you have any medical
history... this is a big one. FS 4. Any other issues
or 'red flags' that you know of regarding the company or market space,
or advice you would give me in making my career decision? I would want to know
what current vendor programs ***** has, what type of volume they are
doing with these programs, and what the unique selling propositions
they provide for these vendors. I
would also be asking questions about **** s ability to process the leases.
Does ***** have its own funds?
If not, who do they sell their paper to? Additionally, how fast are credits turned around and how fast are
fundings turned around? How do
these figures compare with ******s competitors in the targeted space
and how do they compare to some of the best in the vendor leasing arena
(GE, DLL, Marlin, GreatAmerican, AMEX, etc).
Finally, will you be expected to process deals or simply bring
in the vendors? If you are looking to make six figures then it is going
to be much easier if you have key strategic resources at your disposable. PB Are there any boundaries
surrounding the numbers hes being offered right now? What are the average transaction sizes and what
are the average grosses on
their leases? Who funds their
deals? Are they a direct lender, a super broker,
broker, etc.? And, how do they
get paid? Are they discounting or brokering?
How do they calculate their commissions? Depending on what
answers you get from these questions could lead to asking a bunch more. BL In the upper middle
ticket business he needs to be creative and open minded. ******* will provide the training to be successful as will anyone
with middle market experience that is still out there. This is not a business for someone who lacks
problem solving skills. The most
difficult part will be to manage the client’ss expectations with the
products available in the marketplace.
Sometimes this takes mo Guns" at every leasing company know what
I'm talking about. JR Where do you want to go? If you know the leasing business find
out who the employer has for funding sources and how long the relationships
have been in place. If the broker doesn’t last long with stable
sources there must be a reason why. A far older rep once warned
me if you walk with the lame you’ll develop a limp. Work for someone
with a questionable reputation and not only can it rub off on you but
you could find yourself wed to poor
business practices that could make you less desirable to your next employer. DR Can you think out
of the box? Can you establish a Consultive relationship with
someone and come up with solutions to problems that they didn't know
they had? If you can relationally save someone money in this economic environment,
and help sales people to sell more equipment you will be successful.
You have to commit to learning everything there is to know in your
spare time, while being available for your customers 24-7... UNDER PROMISE
and OVER PREFORM... this is the best way to manage customer expectations
and you will only be able to this if you understand the process
and the deal flow completely... other than that it is a "piece
of cake" good luck to you (I would suggest that you commit to 10 hours
a day minimum... the harder you work, the luckier you get) FS ----------------------- In prefacing his
remarks, Jim Raeder commented on the person who originally asked the questions
about whether this was the time to get into equipment leasing sales: “ This is quite a jump. From
a Fortune 100 company selling electronic payment systems to a small
company selling small ticket equipment leases?
Are you sure you are ready for this
transition(less resources, less name recognition, etc.)? “Good company to
join and learn the basics. They
are primarily focused on larger transactions with unique structures. The sales cycle of these transactions are long
and competitive. He should make
sure he give ample time to hit a “Home Run” because there will be a
few “Strike Outs” on the way. Once
he’s learned the business I’d be glad to discuss with him additional
avenues of increasing income through alternative finance
products. “To sum this up:.
He’s making the right move at the right time if he can commit more then
8 hours a day.” ------------------------- For every $1 of revenue
that's generated in "fee" income, we average, this
year, $0.44 (43.6%) in sales commissions and $0.25 (24.8%) in
expenses to "facilitate" that business. That leaves $0.32
(31.6%) of every dollar in net income. We take no salaries,
so that's what is split amongst the partners (the "facilitators";
the "risk-takers") for take-home pay. Commission structure
. . . Our general compensation
plan for salespersons is 50% of the gross profit commissions
on a deal that they bring to the table and 35% on
a "house" deal. We pay for virtually
everything; telephone, marketing, trade-shows, travel,
computer, etc., etc. While we
have paid for health insurance
in the past, we do not currently do so (times are
tough!). Only very extra-ordinary,
deal-specific, expenses are deducted from the gross commissions
for purposes of calculating a salespersons commission
on a deal. James Brustad AMERICAN LEASING
ALLIANCE LLC phone.847.458.0191.x.11 fax.847.458.019 --- ELA 2003 Industry
Compensation Survey Regarding your Salesman
Pay Survey, the ELA has just completed its 2003 Industry Compensation
Survey, which includes several sales positions. The survey is available at elaonline.com for a fee. Ralph Petta ELA Vice President-Industry
Services (703) 516-8364 “This survey provides
an analysis of prevailing wage and compensation data. It reports on
salaries, benefits and incentive plans offered by member companies and
covers 33 leasing positions, identified by detailed position descriptions. “Member companies
who participated in the survey paid $2,600.00 to cover the cost of the
survey. Survey is free to companies who participated and $3,500 for
member non-participants & $4,500 to non-members. “Member Price: $3500 “Non-Member Price:
$4500” http://www.elaonline.com/ELAstore/index.cfm?fuseaction=view_product&prod_id=112 (If a reader has
purchased this report and would like to share a “review” or “recommendation,
Leasing News would be glad to print it. editor )
|
|
